Seeking equitable, efficient and transparent tax code, the ASSOCHAM President Dr. Swati Piramal pressed for immediate integration of excise and service tax into Central GST from April 2010 and demanded that corporate tax be reduced at 25% and that income-tax be curtailed to 20% for SMEs from present 30%.
In her Pre-Budget presentation with Finance Minister Mr. Pranab Mukherjee among other industry leaders, the ASSOCHAM Chief strongly advocated for continuation of stimulus package for fiscal 2010-11 also which can be gradually phased out subsequently.
Dr. Piramal argued that withdrawal of stimulus packages could be counter productive to recovery on which industry has gradually started returning to. Fiscal deficit is not only the concern for the government but equally so for Indian industry also and one suggested way out to contain it could be through expeditious disinvestment process.
The ASSOCHAM Chief also sought a flawless Goods and Service Tax (GST) regime which can be ensured with subsuming 5 key element of taxation into it. These include purchase tax, electricity duty and taxes on natural gas, sugar and textiles. The flawless GST, according to ASOCHAM will reduce cost of production of Indian industry by 10-15% and additional accrue the government annual revenue to an extent of Rs.1 lakh crore.
However, it has demanded exclusion of liquor and tobacco product from GST for social reasons since these already fall under high excise tax net to reduce their consumption.
Dr. Piramal stressed that corporate tax in India is still higher as it’s effective rates exceed 35% and discourages foreign investments including Indian business. The ASSOCHAM also demanded that service tax should be extended to all services except those in negative list because it supports the policy of wider tax base with low tax rate which include tax compliance and GDP growth rate.
On the personal tax front, the ASSOCHAM has recommended that it’s ceiling should be gradually enhanced to Rs.5 lakh per annum and taxes on Chamber, clubs or associations which provide certain services be withdrawn as Chambers and Commerce are non-profit making organization.
Past President ASSOCHAM, Mr. Venugopal N. Dhoot and Chief of Videocon Industries demanded that their should be gradual phasing out of Stimulus package after 2011 is over so that Indian industry gears it up completely to take on the global competition.
The budget proposals of the Finance Minister should be simple and transparent, equitable, moderate, competitive and efficient so that the tax compliance go still further, he added.